Long queue is witnessed at a filling station in Colombo, Sri Lanka, on June 15, 2022. Sri Lanka's state-owned electricity producer Ceylon Electricity Board (CEB) Engineers' Union warned on Wednesday that the country might continue to experience power cuts for at least three more years.(Photo: Xinhua)

An International Monetary Fund (IMF) team arrives in Sri Lanka on Monday for talks on a bailout program, but time is short for a country, which is just days from running out of fuel and likely months from getting any relief money.

Sri Lanka is battling its worst financial crisis since independence in 1948, as decades of economic mismanagement and recent policy errors coupled with a hit from COVID-19 to tourism and remittances, shriveling foreign reserves to record lows.

The island nation of 22 million people suspended payment on $12 billion debt in April. The United Nations has warned soaring inflation, a plunging currency and chronic shortages of fuel, food and medicine could spiral into a humanitarian crisis. 

The IMF team, visiting Colombo through June 30, will continue recent talks on what would be Sri Lanka's 17th rescue program, the IMF said on Sunday.

"We reaffirm our commitment to support Sri Lanka at this difficult time, in line with the IMF's policies," the global lender said in a statement.

Colombo hopes the IMF visit, overlapping with debt restructuring talks, will yield a quick staff-level agreement and a fast track for IMF board disbursements. But that takes months, while Sri Lanka risks shortages and political unrest.

"Even if a staff-level agreement is reached, final program approval will be contingent upon assurances that official creditors are willing to provide adequate debt relief," said Patrick Curran, senior economist at US investment research firm Tellimer.

"All considered, the restructuring is likely to be a protracted process."

Reuters